Stock Pick: Chart Triggers Buy Signal For Splunk

Author: BobLangMay 26, 2016

Splunk is one of those highly volatile names that when it trends it can provide some great profit opportunities. As we see from the chart this stock has created a wide range over just the past few months. The gap lower in February seemed devastating but Splunk got its energy back following a strong earnings report a few weeks later. That move left a big gap in the chart and the following weeks saw this stock making higher higher highs, higher lows in a straight line (not much volatility - see the big arrow).

Recently Splunk pulled back to support and put in a higher low on the chart, and now we see the stock trading above the 200 moving average for the first time in many months. The MACD is now on a buy signal and while we see an overbought condition, we should see the stock trade back to the 50 moving average, which would be a good stop to add the position. Volume trends have been very strong and positive.

BobLang

Member Since 09.20.2012

Bob Lang is the founder and chief options strategist for Explosive Options. Bob uses his unique blend of charting, technical analysis and option trading to find the best ideas for his subscribers. He previously was a portfolio manager for a hedge fund and a very large pension and 401K system. He holds an M.B.A. from the University of Redlands and Bachelor's degree in Finance from San Diego State University.

Learn more about Bob's newsletter at www.explosiveoptions.net He is an in-demand educator and speaker on trading education, speaking to a wide variety of groups on a wide range of educational and trading topics, including technical analysis, options trade selection, and the psychology of trading effectively.